Japanese financial regulator asks FTX Japan to suspend operations

Pursuant to the orders, FTX Japan will be required to suspend OTC derivatives trading and associated margining as well as new deposits from November 10 to November 31 december. 9 unless the FSA intervenes.

Japan's Financial Services Agency, or FSA, has asked FTX Japan to suspend trading orders, citing FTX Trading Limited's policies.

In a Nov. 10 announcement, the FSA said it had taken administrative action against FTX Japan following FTX Trading Limited's suspension of withdrawals "without clearly explaining the reasons to investors." The financial regulator said it issued suspension orders and business improvement orders in accordance with Japan's Payment Services Law and the Financial Instruments and Exchanges Law.

"There have been reports that FTX Trading Limited is facing credit uncertainties," the FSA said. “It is necessary to take all possible measures to avoid a situation in which the interests of creditors and investors are harmed by outflows to affiliates of the company. Therefore, this situation of our company is not recognized as having the system in place to properly meet [its financial obligations]."

Under the orders, FTX Japan will be required to suspend OTC derivatives trading and associated margining as well as new user deposits from November 10 to December 9, unless the FSA intervenes. The financial regulator also ordered the exchange to hold its asset domestically over the same period, correctly flagging the liabilities on its balance sheet.

The FSA Business Improvement Order requires FTX Japan to submit a plan by November 16 that outlines how it intends to protect investors and provide transparency on the current situation with FTX:

"Until the implementation of the business improvement plan is complete, monthly progress and implementation status should be reported in writing by the 10th of the following month."

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